GST council may look at reducing tax on third party insurance premium: Report

The GST council is expected to meet in the next 10 days to consider various contentious issues, including bringing petroleum and aviation fuel under its ambit

The Goods and Services Tax (GST) Council may consider cutting the tax rate on payment of third-party vehicle insurance premium in order to “ease the burden on consumers”, The Times of India reported.

The newspaper quoted sources as saying that the Prime Minister’s Office (PMO) has asked the finance ministry (Department of Financial Services) to look into the issue and “prepare a proposal that can be placed before the GST council”.

Third-party insurance premium is taxed at 18 percent right now, and it is mandatory for every vehicle owner to have a policy.

“There was a unanimous view that the GST rate needs to be rate needs to be rationalised in this case since the vehicle owner has no choice than buying the policy,” a government official told the newspaper.

The GST council is expected to meet in the next 10 days to consider various contentious issues, including bringing petroleum and aviation fuel under its ambit.

Moneycontrol had earlier reported that the Insurance Regulatory and Development Authority of India (IRDAI) was considering cutting third-party vehicle insurance premium by 10 percent.

Commercial vehicle owners have been asking for a rate cut as the mandatory tax makes the vehicles expensive. They believe that a reduction in tax rate will also help increase the insurance cover, which at present is only 50 percent of all vehicles.

“Since it serves a greater social cause and has a large impact, we are still hopeful that the government will do away with the GST. This will bring down the premium of a big truck by Rs 5,000-7,000 on an average and will bring some relief,” Bal Malkit Singh of All India Motor Transport Congress told the paper.